The 45-Day and 180-Day Rules: Critical Deadlines Every 1031 Investor Must Know

In a 1031 exchange, meeting the deadlines is the foundation of a valid, tax-deferred transaction. Understanding the timing rules is crucial for any real estate investor who wants to avoid costly tax consequences.

The Two Most Important Deadlines

1. The 45-Day Identification Period

From the date you sell your relinquished property, you have 45 calendar days to formally

identify potential replacement properties. This must be done in writing and submitted to your Qualified Intermediary (the neutral party who holds the proceeds).

• You can identify up to three properties (without regard to value).

• Or, if you identify more than three, the total value must not exceed 200% of the sold

  property’s value.

2. The 180-Day Exchange Period

You must close on the replacement property within 180 calendar days after the sale of your original property, or by the due date of your tax return (including extensions), whichever comes first.

Why Timing is Critical

Missing either the 45-day or the 180-day deadline means the entire exchange fails and you’ll owe capital gains taxes on the sale.

There are no exceptions for:

• Illness

• Financing delays

• Natural disasters

• Scheduling issues

If the IRS deadline passes, the exchange is disqualified—period

How Smart Investors Stay Ahead

• Line up financing early.

• Identify multiple potential replacement properties (in case one deal falls through).

• Work closely with your attorney, CPA, and Qualified Intermediary from the start.